…SMART goals — goals that are Specific, Measurable, Actionable, Relevant and Timely — have become the norm. A typical SMART goal might be “My marketing campaign will generate 4,500 qualified sales leads for the sales group by the end of Q3’09.”

The specificity of SMART goals is a great cure for the worst sins of goal setting — ambiguity and irrelevance (“We are going to delight our customers every day in every way!”).

But there’s a problem with stopping there:

SMART goals presume the emotion; they don’t generate it…

Research backs this up:

In the 1980’s, a major study of corporate change efforts found that financial goals inspired successful change less well than did emotional goals, such as the goal to provide better service to customers or to make more useful products. According to the researchers, “Effective visions expressed values that allow employees to identify with the organization… One manager at a glass company suggested, “it’s hard to get excited about a 15% return on equity.”

“Institutions that can communicate a compelling historical narrative often inspire a special kind of commitment among employees. It is this dedication that directly affects a company’s success and is critical to creating a strong corporate legacy,” said author Adam Galinsky, Morris and Alice Kaplan professor of ethics and decision in management.

…when employees are asked to think about an alternative universe where their company did not come into being, they come to see their company’s current circumstance and future trajectory in a more positive light. This “near-loss” mentality increases their commitment toward the institution and overall morale.

Management consultants sometimes distinguish among I-companies, we-companies, and they-companies. To get a rough idea of an organization’s climate, they ask employees to talk about their typical workday. If employees refer to “my office” or “my company,” the atmosphere of the workplace is usually fine. People working in these I-companies are reasonably happy but not particularly wedded to the company itself. However, if they refer to “our office” or “our company,” pay special attention. Those in we-companies have embraced their workplace as part of their own identities. This sense of we-ness may explain why they work harder, have lower employee turnover, and have a greater sense of fulfillment about their work lives. And be very concerned if an organization’s employees start calling it “the company” or, worse, “that company” and referring to their co-workers as “they.” They-companies can be nightmares because workers are proclaiming that their work identity has nothing to do with them. No wonder consultants report that they-companies have unhappy workers and high turnover.

So you need SMART goals that are clear and give the mind direction. But you need a story to inspire emotion and to build morale.

By the way — something you don’t need is those silly “team-building” exercises.

It is important to note that building strong social capital does not require that all colleagues become best friends or even that everyone like one another all the time—this would be impossible. But what does matter is that there be mutual respect and authenticity. Coercing employees into awkward icebreakers or forced bonding activities, like making everyone at a meeting share something about their private lives, only breeds disconnection and mistrust.